AMNews: Feb. 4, 2002. Some question benefit of Medicare drug discount cards ... American Medical News

Some question benefit of Medicare drug discount cards

But Pfizer, sponsor of the latest prescription plan, and other proponents say they are just a placeholder until a full benefit passes.

By Markian Hawryluk, AMNews staff. Feb. 4, 2002. Additional information

The number of Medicare drug discount plans is piling up, with both private companies and the government proposing them as a bridge to a full-fledged Medicare prescription drug benefit. But discount card critics have countered that the bridge is a detour designed to move Medicare off the road to a real drug program.

In January, Pfizer became the third drug manufacturer to offer a new prescription drug discount card to low-income Medicare beneficiaries. But unlike the GlaxoSmithKline and Novartis cards, which offered a discount of up to 25% off the cost of the companies' medications, Pfizer's Share Card program would charge low-income seniors a $15 flat fee for a month-long supply of Pfizer prescription drugs. That fee is on par with co-payments that commercial insurers charge their enrollees.

"Until the administration, Congress and the states design an appropriate high-quality, long-term solution for America's seniors, we are bridging the gap now for those most in need," said Pfizer Chair and CEO Hank McKinnell. Pfizer plans to launch a comprehensive grassroots campaign to enroll as many as 7 million seniors through emergency departments, health clinics, pharmacies, senior centers and physician offices.

The Pfizer card would be offered to a smaller group of beneficiaries than the other manufacturers' discount cards but would offer a greater benefit and cover more drugs commonly used by Medicare beneficiaries. Pfizer manufactures nine medications that rank among the 50 most-prescribed drugs for Medicare patients, including Lipitor (atorvastatin calcium), Norvasc (amlodipine besylate) and Zoloft (sertraline hydrochloride).

Meanwhile, Tom Scully, administrator of the Centers for Medicare & Medicaid Services, said in mid-January that the Bush administration's Medicare discount drug card would be out "any day now." Last July CMS announced plans for the cards, but implementation was delayed by a lawsuit by the National Assn. of Chain Drug Stores and the National Community Pharmacists Assn. A U.S. district court judge sided with the pharmacy groups and issued a temporary injunction in September 2001 but later allowed CMS to revise the plan.

Stealing thunder

Even opponents of the discount drug cards acknowledge that Pfizer's initiative is laudable. But they worry that the drug cards are being used to derail efforts for a comprehensive Medicare pharmacy benefit, which would be much more costly for drugmakers and Medicare.

"It's a free way to look like you're doing something on prescription drugs because you know that we don't have the money because of the budgetary constraints to create a real Medicare prescription drug benefit," said Debbie Curtis, chief of staff for Rep. Fortney "Pete" Stark (D, Calif.). "These prescription drug cards exist out there in the marketplace today. Anybody who wants one can have one, can have 10, can have a dozen of them."

The GAO found the savings from Medicare drug discount cards averaged only 11.4%.

Stark and a number of other House Democrats asked the General Accounting Office to investigate the savings that current discount drug cards yield for Medicare beneficiaries. The GAO found that the savings were 11.4%, far less than the 25% to 40% many of these cards tout.

"It sullies the good name of Medicare," Curtis said.

But as for the Bush administration's plan, Scully denied it was intended to substitute for a more comprehensive Medicare drug program.

"We believe it's a building block," Scully said. "We can have an honest dispute about how to structure a Medicare drug program in the long run, but there is no reason why we shouldn't try to get the seniors we have into purchasing pools temporarily and get them discounts." He also said the discount drug card would provide the infrastructure needed to implement a full drug benefit.

The administration has the backing of House Republicans, as well as key members of the Senate, including Sen. Bill Frist, MD (R, Tenn.). Dr. Frist has introduced a bill that would provide legislative authority to implement Medicare-sponsored drug cards.

Senate Democrats, however, may be more hesitant. Elizabeth Fowler, the majority staff person responsible for health issues for the Senate Finance Committee, said the panel was interested in considering the administration's proposal, but expressed concern about its impact on enacting a Medicare benefit.

"We also believe that there's some merit to the claims of pharmacists and drug companies," Fowler said. "But nonetheless, we're willing and open to taking a look, particularly if there's some way to guarantee that beneficiaries would actually get a discount."

Fear of taking a hit

Pharmacy groups worry that any discounts on the price of drugs will be borne by the pharmacies themselves. According to Craig Fuller, president and CEO of the chain drugstore group, pharmacies make an average of 32 cents profit on a typical $46 prescription.

"That's less than 1% of the costs," Fuller said. "So any proposal that suggests the community pharmacy is somehow going to provide large savings as part of a discount program, it's got to come out of [the acquisition cost] or we're simply giving products away."

Pharmacies make an average of 32 cents profit on a typical $46 prescription.

While the cards out today have not provided the large discounts some had hoped for, they have provided seniors who would otherwise be paying full price some savings, proponents said. According to Jeff Sanders, senior vice president of Advance PCS, a pharmacy benefit management company in Scottsdale, Ariz., seniors using the Advance drug discount card realize a savings of $9 per prescription, or a 21% discount. While some have saved over $1,000, the average savings is about $150 to $200 per year.

The Bush administration hopes its discount card would be able to achieve higher savings by guaranteeing volume exclusivity. Currently, a PBM or other entity that wants to negotiate discounts from drug manufacturers for a seniors market can't guarantee any volume, so the manufacturer does not want to discount its price.

Under the administration's plan, Scully said, only nine to 15 groups would get Medicare's approval to offer discount cards.

"We are going to use the power of Medicare and the marketing of Medicare to get seniors into a system where they'd call up and they'd enroll in these plans, and we'd get much bigger exclusive coverage," Scully said.

Each endorsed card would be required to meet certain marketing material guidelines, to publicly disclose the prices on a consortium Web site, to conduct extensive beneficiary education and to have a grievance procedure in place. Seniors who enroll would be locked into a plan for six months.

House Republicans still believe they can find the money this year to fund a full prescription drug benefit because the measure has national support. But GOP leaders may try to tie the benefit to broader Medicare reforms and some limitations on direct-to-consumer drug advertising.

ADDITIONAL INFORMATION:

Banking on prescriptions

Average monthly out-of-pocket Medicare prescription drug costs:

With no drug discount card: $69.54
With a typical discount card: $62.94
With the Pfizer Share Card: $15.00

Source: General Accounting Office report and Pfizer

Weblink

Pfizer for Living Share Card program site (http://www.pfizer.com/pfizerinc/about/sharecard/sharecard.html)

Novartis Care Card page (http://www.novartis.com/carecard/)

GlaxoSmithKline Orange Card news release (http://www.gsk.com/press_archive/press_10032001.htm)

GOVERNMENT & MEDICINE